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Reforming higher education requires changing the incentives at play—for students, professors, presidents, alums and trustees. This post provides an overview of the economic model of Duke University, where I have been a professor since 1997 and played a variety of leadership and faculty governance roles. The modern research university is an exceedingly opaque organization and this piece begins to bring some clarity about the finances that drive the university incentive structure.
Is Duke Rich or Not?
The answer is yes, and no. There are only 10 to 15 universities in the U.S. that do not covet Duke’s financial resources—our problem is that we aim to compete with the very few who have far more money than Duke (e.g., Stanford, Harvard, Yale). This reality leads to the following repetitive conversation:
“How can Duke not afford to [ ] because we have Billions of dollars?” (exasperated tone)
The ‘cause’ in the blank might be a further increase in Duke’s minimum wage; expanding need-based financial aid for undergraduates, or extending same to international students; increasing the guaranteed stipend for Ph.D. students; or hiring more faculty in Physics. Or English. Or African and African American Studies. Or building more and better athletics facilities.
And on and on. The problem is that you can only spend a dollar once.
Duke could do most anything it wants to do, just not all of the things that it would like to do. Or that the loudest voices insist be done. And there are some financial problems that are baffling. For example, how Duke can have so much, yet today faces a multi-million dollar deferred maintenance problem that must finally be addressed?
How indeed? Numerous leaders responded to incentives over multiple decades leading to decisions to invest in new and exciting academic programs as Duke rose in prominence in the 1980s and 1990s. It was easy to prioritize such investments over modernizing the plumbing in classroom buildings. Duke is one of only six universities to have been ranked in the U.S. News and World Report top ten each time the list has been produced since the late 1980s, and leaders in the past 25 years have been risk averse to a potential Duke decline in standing on their watch. And creating new programs is how academic leaders get noticed and rise to loftier positions at other Universities, leaving someone else to worry about the toilets later.
Show Me The Money
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